Wage Notes
- The total private wage series only dates to March of 2006.
- Wage data or production and nonsupervisory workers dates back to 1964.
- The deflator for all workers is the CPI-U (normal published CPI).
- The deflator for production workers is the CPI-W.
Adjusted for inflation (a dollar bought much more in 1973 than it does today), wages have barely risen.
In real terms, making $4.05 per hour in February of 1973 would be worth nearly as much as someone making $28.26 today.
That is how much inflation has destroyed the dollar.
“Wage Growth Is Too High”
As background for this post, please see Minneapolis Fed “Wage Growth Is Too High” for Our Two Percent Inflation Target
Four Kashkari Statements
- “Wage growth is at a level that it is actually too high to be consistent with our 2 percent inflation target.”
- “We would like to avoid a recession but we know we have to get inflation down. Getting inflation down is job one.”
- “We would need to get wage growth closer to 3 percent to be consistent to our 2 percent inflation target.”
- “I don’t know how embedded [wage growth is] but it is our job to make sure that it does not become embedded.”
Nominal Wages Year-Over-Year Percent Change
Year-over-year, wages for all private workers is up 4.43 percent. Wages for production and nonsupervisory workers are up 5.13 percent.
And that is what Kashkari is complaining about. But year-over-year prices are up much more. Here’s the result.
Real Wages Year-Over-Year Percent Change
In real terms, year-over-year wages have fallen for 16 consecutive months, ever since September of 2021. To the worker it feels like this.
Hourly Earnings and Real Hourly Earnings Last 2 Years
Last Two Years Chart Notes
- In nominal terms the hourly wage rose for all private workers rose from $29.92 to $33.03
- In nominal terms the hourly wage rose for production workers rose from $25.17 to $28.26
- In real terms the hourly wage rose for all private workers rose fell from $11.39 to $10.99
- In real terms the hourly wage rose for all production workers rose fell from $9.81 to $9.58
Kashkari is concerned that workers are making too much.
This is what the Fed has done with its perpetual policy of trying to create more inflation.
And now because workers are making too much, it seeks a recession to cure the problem.
How the Fed Messes With People’s Lives From a Mortgage Rate Perspective
For further discussion, please see How the Fed Messes With People’s Lives From a Mortgage Rate Perspective
No one ever holds these economic charlatans accountable for the messes they make.
This post originated on MishTalk.Com.
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The Parable of the Shrewd Manager
Jesus also said to His disciples, “There was a rich man whose manager was accused of wasting his possessions. So
he called him in to ask, ‘What is this I hear about you? Turn in an
account of your management, for you cannot be manager any longer.’
The
manager said to himself, ‘What shall I do, now that my master is taking
away my position? I am too weak to dig and too ashamed to beg. I know what I will do, so that after my removal from management, people will welcome me into their homes.’
And he called in each one of his master’s debtors. ‘How much do you owe my master?’ he asked the first.
‘A hundred measures of olive oil,’a he answered.
‘Take your bill,’ said the manager. ‘Sit down quickly, and write fifty.’
Then he asked another, ‘And how much do you owe?’
‘A hundred measures of wheat,’ he replied.
‘Take your bill and write eighty,’ he told him.
The
master commended the dishonest manager because he had acted shrewdly.
For the sons of this age are more shrewd in dealing with their own kind
than are the sons of light. I
tell you, use worldly wealth to make friends for yourselves, so that
when it is gone, they will welcome you into eternal dwellings.
Whoever
is faithful with very little will also be faithful with much, and
whoever is dishonest with very little will also be dishonest with much. So if you have not been faithful with worldly wealth, who will entrust you with true riches? And if you have not been faithful with the belongings of another, who will give you belongings of your own?
No
servant can serve two masters. Either he will hate the one and love the
other, or he will be devoted to the one and despise the other. You
cannot serve both God and money.”
Beauty is relative.
A room full of ugly people will allow marginal beauty to shine.
A roomful of uglier people will allow the ugly to be beautiful.
desperate/hungry immigrants at a time when they’re the solution to our
labor shortages.”
Only price increases generated
by demand, irrespective of changes in supply, provide evidence of monetary inflation.
There must be an increase in aggregate monetary purchasing power, AD, which can
come about only as a consequence of an increase in the volume and/or
transactions’ velocity of money.
The volume of domestic money flows must expand
sufficiently to push prices up, irrespective of the volume of financial
transactions consummated, the exchange value of the U.S. dollar (“reflected in FX indices and currency pairs”), and
the flow of goods and services into the market economy.
Dr. Daniel Thornton: “Because the concept
of velocity stems directly from the theory of the demand for money, anything
that affects velocity can be related to some aspect of the demand for
money.”